indian budget analysis
UNION BUDGET ANALYSIS .
State of the economy before Budget 2014-15
1. Inflation: India’s economy has witnessed low growth and high inflation scenario for 7 out of preceding quarters to March 2014. Non-food and fuel consumer price inflation has remained over 8% for the past two years, according to RBI’s assessment. The RBI wants the government to rein in the fiscal deficit.
2. Growth: India’s GDP growth continued to be below 5% for the second consecutive year. This was largely because of poor performance by the industrial sector, the RBI said. Agricultural growth improved due to the good monsoon, while services sector remained unchanged. The central bank suggested easing of domestic supply bottlenecks and progress on the implementation of stalled projects that have already been cleared should further improve the growth outlook.
3. Household savings rate: While household financial savings (which include bank deposits) as per cent of GDP have been falling, expenditure on valuables (which includes gold) has risen over the last few years. This trend reflects something called financial disintermediation with households. This means they are switching away from financial savings to valuables mainly gold.
4. Gross fixed capital formation: Gross capital formation (GCF) declined for the second consecutive year in 2012-13. This indicator deals with how much of the total expenditure in the country is for investment purposes. Capital formation measures how much capital or assets have been added or accumulated over the period. Generally, higher the capital formation, greater is the scope for income growth. The decline in GCF was led by the private corporate sector adversely impacting the growth prospects of the economy.
5. Fiscal deficit challenges: The government intention to do the right things would be seen steps it takes to rein
State of the economy before Budget 2014-15
1. Inflation: India’s economy has witnessed low growth and high inflation scenario for 7 out of preceding quarters to March 2014. Non-food and fuel consumer price inflation has remained over 8% for the past two years, according to RBI’s assessment. The RBI wants the government to rein in the fiscal deficit.
2. Growth: India’s GDP growth continued to be below 5% for the second consecutive year. This was largely because of poor performance by the industrial sector, the RBI said. Agricultural growth improved due to the good monsoon, while services sector remained unchanged. The central bank suggested easing of domestic supply bottlenecks and progress on the implementation of stalled projects that have already been cleared should further improve the growth outlook.
3. Household savings rate: While household financial savings (which include bank deposits) as per cent of GDP have been falling, expenditure on valuables (which includes gold) has risen over the last few years. This trend reflects something called financial disintermediation with households. This means they are switching away from financial savings to valuables mainly gold.
4. Gross fixed capital formation: Gross capital formation (GCF) declined for the second consecutive year in 2012-13. This indicator deals with how much of the total expenditure in the country is for investment purposes. Capital formation measures how much capital or assets have been added or accumulated over the period. Generally, higher the capital formation, greater is the scope for income growth. The decline in GCF was led by the private corporate sector adversely impacting the growth prospects of the economy.
5. Fiscal deficit challenges: The government intention to do the right things would be seen steps it takes to rein